UK Mail (UKM) has upped its interim dividend, giving the shares a yield well above 5 per cent. Chief executive Guy Buswell says that should tempt investors to pick up the stock, which has fallen more than a quarter since a guarded update in September.
The company had a tricky first half. The parcels business, which accounts for 45 per cent of group revenues, is still the top performer. But it struggled in the closing weeks of the second quarter, reflecting a dip in e-commerce sales - its key growth driver. The small pallets division (6 per cent of group sales) also had problems. Operating profits fell 59 per cent to £200,000 as a result of higher network costs, forcing management to book a £7.3m impairment charge.
Yet Mr Buswell remains optimistic. Christmas shopping should boost the parcels division, and the group is also on schedule to move into an £8.1m new hub near Coventry in January. Meanwhile, the traditional mail business is taking market share: daily mail volumes rose 2 per cent in the first half, even as industry volumes are falling by about 3 per cent a year.
Analysts at Investec expect adjusted pre-tax profits of £22m for the full year, giving EPS of 31.6p - up from £22.8m and 31.8p, respectively.
| UK MAIL (UKM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 400p | MARKET VALUE: | £219m | |
| TOUCH: | 390-405p | 12-MONTH HIGH: | 715p | LOW: 380p |
| DIVIDEND YIELD: | 5.4% | PE RATIO: | 21 | |
| NET ASSET VALUE: | 123p | NET CASH: | £9.5m | |
| Half-year to 30 Sept | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 243 | 11.9 | 17.0 | 7.1 |
| 2014 | 241 | 4.9 | 4.1 | 7.3 |
| % change | -1 | -59 | -76 | +3 |
Ex-div: 4 Dec Payment: 16 Jan | ||||
